Amazon Agrees To Higher Prices For eBooks

The price of electronic books is going up. Just days before
Apple releases its iPad,
Amazon.com gave two major publishers permission to raise the price of
their eBooks for Kindle
readers. The agreements with Simon & Schuster and Harper-Collins give the
publishers the ability to break from Amazon's policy of holding new titles to a
price of $9.99.

Under the terms of the agreement, eBooks from Simon &
Schuster and Harper-Collins can now be sold for $12.99 or $14.99. The agreement
is similar to the deal Apple has made with publishers. Although Amazon.com sought
to keep the price of eBooks
low, publishers have argued that digital versions were worth more than Amazon allowed them to
charge. Thanks to competition from various eReaders in the market, publishers
are now able to dictate their own terms.

When the iPad was unveiled, chief executive Steve Jobs
announced deals with five major publishers. He also announced an agreement that
allowed publishers to set higher prices while giving Apple a 30% cut. Prior to
this agreement, Amazon had been selling digital versions of hardcover new
releases and bestsellers for $9.99 with the goal of driving sales of its Kindle
eReader. At the time,
publishers were opposed to the low price but were not in a position to argue
since Amazon was the main player in the market. Today this is no longer the
case.

After the announcement of the iPad, publisher Macmillan told
Amazon it wanted to charge $12.99-$14.99 for its eBooks. Amazon protested and
even pulled Macmillan titles temporarily. Ultimately, Amazon gave in and said
it had to accept Macmillan's terms. Hachette Book Group quickly followed
Macmillan in charging higher prices.